The first and most optimistic response was complete rational expectations econometrics. A rational expectations equilibrium is a likelihood function. Maximize it.
When I was a graduate student, estimating and interpreting distributed lags topped the agenda of macroeconomists and other applied economists.
I wasn't the brightest kid, not by a long shot. I was interested in football, in girls, in getting my work done with the least amount of effort.
In the 1980s, there were occasions when it made sense to say, 'it is too difficult to maximize the likelihood function, and besides if we do, it will blow our model out of the water.
There was a danger that skeptics and opponents would misread those likelihood ratio tests as rejections of an entire class of models, which of course they were not.
I think you've got to watch out for anybody in high school who says he wants to become an economist.
I'm happy to say I am a Harrison-Kreps-Keynesian.
What I really don't like is oversimplification.
Keynes was a very good economist. He was brilliant. He had wonderful insights. His work has inspired me many times.
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